Does anyone here remember in the waning months of the Bushwa's last term how they sent out everyone a 300 dollar check for 'economic relief'? I think you got one if you filed your federal income tax returns properly. It wasn't in any way a tax refund (although I also remember Bush was a big tax cutter, which is one of the ways he raised the federal deficits so much--in addition to pouring over a trillion dollars a year on militarism in the name of 'security' and the 'war on terror'). That sounds like something postmo Keynesian might argue for, but it didn't seem to have much of an effect on consumption.
At any rate, it doesn't look like those depending on interest income are going to spend more--that is because they have far less interest income to spend. Meanwhile, those in debt are trying to pay off debt and/or save, with the latter getting no returns. It looks like a 'critical mass' of people have hit the wall and can't borrow anymore. So it doesn't look like you are going to see any increase in consumption on their part. The Obama administration ought to give each household 1000 dollars and cut the military budgets by 500 billion dollars, starting NOW. That would do it. Of course, there would be a mlitary coup in answer to it (most likely with ironmaiden Clinton taking charge of things with Gen. Gates in a junta). But if that didn't happen, then the Obamaites ought to apologize to Iraqis in order to avoid war reparations and use the savings to provide health care and adequate nutrition to all Americans. Then I would be all for war crimes trials for Bush Cheney Rice etc. Seeing how much dignity they brought to the lynching of Saddam Hussein, Bush etc. could be executed on pay-per-view TV, with the profits going toward the national debt. Oops. I'm letting my fantasies carry me away. The real outrageous fantasy comes in saying that Obama would ever do such a thing as cut the military budgets. I'm glad the boys at the Pentagon taught him how to salute the gyrines and flyboys who ferry him around. It makes it look like he really is in charge in DC. Now if someone would only teach him that you bow to the emperor first and then shake his hand. You don't do both at the same time. For your edification: http://finance.yahoo.com/news/Americans-save-more-but-earn-apf-3318981277.html?x=0 excerpt: >>As banks pour money into U.S. Treasurys, it forces down interest rates and >>yields for people with money in government debt or bank deposits. On Friday, the three-month Treasury bill offered a return of 0.02 percent -- after falling as low as 0.005 percent Thursday. That's the lowest level since a year ago, in the throes of the financial crisis. Lower interest rates make it cheaper for people and companies to borrow, and they help sustain a weak economy. They also help keep mortgage rates low, which is key to turning the housing market around. And lower rates make it much cheaper for the government to borrow money to finance deficits. But the government's policy of stimulating the economy by cutting rates to try to get people to borrow and spend is essentially robbing the elderly of a vital income stream, argued Greg McBride, senior financial analyst at Bankrate.com. "It takes money out of the pockets of senior citizens and anyone living on a fixed income and gives it to borrowers, many of whom are overly indebted," McBride said. "It's as if Grandma stuffed an envelope full of cash, walked down the street and gave it to the guy with two new cars, a big-screen TV and who's behind on his mortgage." For some perspective on the rapid drop in CD interest rates, just look back a year. The interest rate for a one-year CD was 2.53 percent this time last year. Today, it earns just 0.88 percent. That means a retiree with $100,000 saved in a CD could have earned $2,530 in 2008, or about $211 a month. At current rates, that same $100,000 is earning just $880 year. The retiree's monthly income has sunk to about $73. Besides savers, low rates hurt investors in fixed-income assets like U.S. Treasurys. Demand for Treasury bonds has soared even as the government auctions off record amounts of new debt to finance record budget deficits. Interest rates aren't expected to rise anytime soon. The Federal Reserve seems determined to keep rates low as long as unemployment remains up and consumer spending is weak. Comments made by top Fed officials in recent days, including Federal Reserve Chairman Ben Bernanke, have convinced investors that any increase in rates is months away at the earliest. "The Fed is not going to be tightening monetary policy for a long time," said Mark Zandi, chief economist at Moody's Economy.com. _______________________________________________ Marxism-Thaxis mailing list Marxism-Thaxis@lists.econ.utah.edu To change your options or unsubscribe go to: http://lists.econ.utah.edu/mailman/listinfo/marxism-thaxis
